The relentless warehousing of wholesale inventories continues, even if the “any minute now” gusher of wholesale sales continues to be pushed back into the indefinite future. Sure enough, the March data showed that wholesale sales disappointed, and instead of growing 1.5%, declined by -1.6%, below expectations of a 0.1% rise. This was the biggest drop in sales since March of 2009: another nail in the coffin of any recovery dreams. That this happened even as inventories increased by more than the expected 0.3%, or 0.4% up from the previos decline of -0.4%, shows that indeed the end-demand weakness has been quite widespread. Logically, the Inventory-to-Sales ratio rose to 1.21, up from the 1.17 a year ago, and the highest also since 2009. Sooner or later all this pent up inventory will have to be cleared, resulting in even more dumpin, price reductions and margin deterioration in a retail world in which the bottom line is more elusive now than it has ever been: just ask Amazon.
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